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Pami Realty, LLC v. Locations XIX Inc.

New Jersey Appellate Division

July 15, 2021

Two parties to a construction contract dispute went to arbitration. As arbitration progressed, the arbitrator engaged in settlement negotiations with the parties.  None of this was reduced to writing at the time. The negotiations were not fruitful. Later, the arbitrator told the parties that he would render a defendant-favorable opinion imminently. Only then did the plaintiff object to the arbitrator’s participation in settlement negotiations. The plaintiff moved in the Law Division to vacate the arbitrator’s award because he had exceeded his powers when he resumed the role of an arbitrator after acting as a mediator mid-arbitration and that any agreement to have him serve as a mediator had to be in writing. Without a hearing, the Law Division affirmed the award. The Appellate Division reversed. The Court held that Minkowitz v. Israeli did not require an agreement to have an arbitrator engage in settlement negotiations be reduced to writing. But the plaintiff nonetheless had the right to an evidentiary hearing as to whether the plaintiff orally agreed to allow the arbitrator to participate in plea negotiations.


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